The XBRL–a financial reporting standard that is growing in popularity–can help insurance companies better cope with heightened disclosure demands, the chairman of the XBRL consortium said at this week's ACORD-LOMA conference.
XBRL–an acronym for eXtensible Business Reporting Language–is a financial and business reporting XML standard currently in practical use in several countries.
In the United States, the Securities and Exchange Commission has started a voluntary program for the filing of financial reports using XBRL to evaluate the technology and its benefits for analysis of data.
Speaking this week at the ACORD-LOMA Insurance Systems Forum in Orlando, Mike Willis, a PricewaterhouseCoopers partner and founding chairman of XBRL International, a non-profit consortium, said XBRL can lower expenses for producing business reports for cost-conscious insurance companies.
"XBRL allows investors and management to perform a higher level of analytical review and a quality control of information. It actually allows companies to articulate their story more clearly to their users," he said.
The idea behind XBRL is that instead of treating financial information as a block of text–as in a standard Web page or a printed document–it provides an identifying tag for each individual item of data, making them computer-readable and easy to manipulate.
"In today's corporate reporting process, you still have to collect and validate data from disparate data stores, analyze them and prepare them for someone else to use. But the problem is that it's manual. As you move data, you find out that each step of the chain is conducted in a manual manner," Mr. Willis observed.
"XBRL is able to automate the handoff of financial information from one level to the next," he said.
Mr. Willis said XBRL tags allow automated processing of business information by computer software, cutting out costly processes of manual re-entry and comparison.
Consumers of financial data, including investors, analysts, financial institutions and regulators, can receive, find, compare and analyze data much more rapidly and efficiently using XBRL format, according to Mr. Willis. He explained that ordinary data can be transformed into XBRL by mapping tools or it can be generated in XBRL by appropriate software.
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